ObamaCare was supposed to stop this sort of thing, wasn’t it? That’s how Pelosi, Obama et al sold the law, but its plain effect has been to hike taxes and rates.
Health insurer Blue Shield of California wants to raise rates as much as 20% for some individual policyholders, prompting calls for the nonprofit to use some of its record-high reserve of $3.9 billion to hold down premiums.
In filings with state regulators, Blue Shield is seeking an average rate increase of 12% for more than 300,000 customers, effective in March, with a maximum increase of 20%.
Some consumer advocates and healthcare economists say Blue Shield shouldn’t be raising rates that high when it has stockpiled so much cash. The company’s surplus is nearly three times as much as the Blue Cross and Blue Shield Assn. requires its member insurers to hold to cover future claims.
Some officials want Blue Shield to dip into its reserves to avoid hiking rates. But the reserves are there for emergencies.
At Blue Shield of California, based in San Francisco, reserves have jumped 77% since 2006 from $2.2 billion to $3.9 billion in September. That has outpaced the company’s 19% growth in annual revenue since 2006.
Blue Shield said its reserves have nothing to do with rate increases, and that money has been put aside for the future benefit of its policyholders.
“Reserves are needed to ensure our members’ claims can be paid no matter what,” said Blue Shield spokeswoman Lindy Wagner. “We need them to protect against uncertainties like a pandemic or another crisis.”
The company also expects higher costs from an influx of new customers under the federal healthcare law in 2014.
“It’s a once-in-a-lifetime change in the healthcare market that will bring a lot of volatility, and we need higher reserves for that,” Wagner said.
The push toward single (government) payer gets a shot in arm from this, naturally. All part of the plan.